President Theodore Roosevelt commissioned sculptor Augustus Saint-Gaudens to redesign all American coinage, however Saint-Gaudens died of cancer after completing design work for the $10 (Eagle) and $20 (Double Eagle) gold pieces. Fortunately, in late 1907 Roosevelt was able to contact one of Saint-Gaudens's students, Bela Lyon Pratt, and commission him to redesign the $2.50 and $5.00 denominations. A year later, the numismatic community was surprised by Pratt's innovative Indian head gold coin design, which featured the legends and motifs incused rather than raised on the coin.

The heraldic eagle has its wings spread from rim to rim with the union shield covering its breast. An olive branch representing the country's peaceful intentions is in the eagle's right claw, with three arrows emphasizing military preparedness in the left. The legend UNITED STATES OF AMERICA surrounds the eagle, with the denomination 2 1/2 D. beneath the bird.

The obverse features a Native American, the first American Indian ever to appear on United States coinage. The chief on the Indian Head is wearing a full-feathered headdress with the word 'Liberty' inscribed on the headband. A border of 13 stars and the minting date encircle him. The reverse of the $2.50 gold piece features a proud bald eagle standing among olive branches, surrounded by the words 'UNITED STATES OF AMERICA'. The motto 'In God We Trust,' and the denomination also appear on the reverse.